Phil.Business Bank’s six-month net profit up 16.2%

PHILIPPINE Business Bank (PBB), the banking arm of Zest-O group founder Alfredo Yao, grew net profit in the first six months by 16.2 percent year-on-year to P300.2 million as earnings from core lending activities as well as non-interest earnings expanded at a double-digit pace.

PBB’s net interest income rose by 12.7 percent year-on-year to P1.2 billion as the thrift bank expanded its loan book by 10.4 percent to P38.5 billion in the first six months compared to the previous year. Net interest margins averaged at 4.3 percent.

On the funding side, PBB’s total deposits increased by 2.2 percent year-on-year to P47.6 billion.

Non-interest income from service charges, fees and commissions also rose by 12.2 percent year-on-year as well as miscellaneous income which increased by 15 percent, boosting overall non-interest income by 13.3 percent year-on-year to P71.5 million.

“Historically, the treasury business is a key contributor to PBB’s income performance. In 2012, core
income was only at P71 million, which means about P90 out of every P100 in pre-tax pre-provision profits (PTPP) came from treasury. Today, the bank’s maturation is evident – we now make P90 out of every P100 in PTPP from our core deposit-and-lending business,” PBB president and chief executive officer Roland Avante said.

“The treasury business, while no longer the centerpiece of PBB’s profitability, will always play a pivotal role in the bank’s business operations. We will be opportunistic in our trading activities,” he added.

Core income refers to total revenues excluding trading gains or losses less non-interest expenses while PTPP refers to net revenues less non-interest expenses

The bank was also able to unlock greater business from an aggressive branch expansion program implemented starting in 2011. From around P2 billion in branch-originated loans in 2011, PBB’s branch lending today handles loans in excess of P15.0 billion, roughly two-fifths of the bank’s loan portfolio.

“The branch expansion program plays a central role in the growth of PBB as it allows us to reach our customers and establish business in new frontiers. The numbers speak for themselves: our loan books have grown around 26 percent over the years, while the branch lending business has increased by more than 60 percent. The branch expansion clearly demonstrates its value,” Avante said.

During the first half of the year, PBB added 10 more branches also also completed the purchase of
Insular Savers Bank (ISB) last June 30. ISB has eight branches, all of them in the Luzon region, alongside assets in excess of P2.0 billion. It has a loan book of P1.5 billion.

Its acquisition of ISB brought the bank’s total branch network to 134 branches as of the end of the first half.

“We expect the acquisition of ISB to be value-accretive to PBB and its shareholders. ISB’s full year run-rate will add roughly 10 percent to the Bank’s bottom line. This transaction gives PBB an opportunity to establish a foothold in the consumer lending business, which is a key attraction in our acquisition of ISB. Bataan Savings and Loan, on the other hand, rapidly expands our presence in a fast-growing province from a lone branch in Balanga to four branches today,” Avante said.